• Gold price builds on its goodish intraday move higher as geopolitical risks revive safe-haven demand.
  • The optimism over the US-UK trade deal and the US-China negotiations might cap the precious metal.
  • The USD sits near a multi-week high amid the Fed's hawkish pause and warrants caution for bulls.

Gold price (XAU/USD) attracts some dip-buyers on Friday following an Asian session slide to the $3,275-3,274 area, and for now, seems to have snapped a two-day losing streak. The precious metal jumps to the $3,330 area, or a fresh daily high in the last hour, amid reviving safe-haven demand on the back of geopolitical risks stemming from the Russia-Ukraine war, the escalation of tensions in the Middle East, and the India-Pakistan border.

Apart from this, a modest US Dollar (USD) pullback from a nearly one-month high touched earlier today turns out to be another factor lending support to the Gold price. However, the Federal Reserve's (Fed) hawkish pause and easing concerns about a US recession should act as a tailwind for the buck. Moreover, the optimism over the US-UK trade deal and the start of US-China tariff negotiations over the weekend might cap the XAU/USD pair.

Daily Digest Market Movers: Gold price attracts safe-haven flows amid rising geopolitical tensions

  • US President Donald Trump and British Prime Minister Keir Starmer announced a limited bilateral trade deal on Thursday that leaves in place a 10% tariff on goods imported from the UK. Adding to this, US Commerce Secretary Howard Lutnick told CNBC that Washington will roll out dozens of trade deals over the next month, though a 10% tariff imposed on most countries will likely stay.
  • Furthermore, the Trump administration is reportedly considering lowering the tariffs on China to 50% from 145% as soon as next week, which adds to the market optimism and might cap the XAU/USD pair. US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet their Chinese counterparts in Switzerland on Saturday to discuss trade and economic issues.
  • The Federal Reserve indicated on Wednesday that it is not leaning towards cutting interest rates anytime soon despite the increasing uncertainty about the economic outlook. This allows the US Dollar to build on its recent bounce from a multi-year low and climb to a four-week top during the Asian session on Friday, and contributes to driving flows away from the non-yielding Gold price.
  • Russia and Ukraine both reported attacks on their forces on the first day of a three-day unilateral ceasefire called by Russian President Vladimir Putin. Furthermore, Israel’s escalation with Iran-backed Houthis in Yemen and fears of a wider military conflict along the India-Pakistan border keep geopolitical risks in play. This, in turn, could lend some support to the safe-haven precious metal.
  • A slew of influential FOMC members are due to speak on Friday. Investors will look for more cues about the Fed's future rate-cut path, which, in turn, will play a key role in driving the USD demand and provide a fresh impetus to the commodity, which remains on track to post modest weekly gains.

Gold price might struggle to build on intraday move up beyond $3,360-3,365 static hurdle

From a technical perspective, the overnight breakdown through the $3,260 resistance-turned-support and the subsequent slide below the $3,300 mark on Friday favors the XAU/USD bears. However, oscillators on the daily chart – though they have been losing traction – are yet to confirm the negative bias. This, in turn, warrants some caution before positioning for deeper losses and suggests that the Gold price could find some support near the $3,265-3,264 horizontal zone. Some follow-through selling, however, should pave the way for a fall towards the $3,223-3,222 intermediate support en route to last week's swing low, around the $3,200 neighborhood.

On the flip side, the Asian session high, around the $3,324 region, now seems to act as an immediate hurdle. Any further move up could attract some sellers and cap the Gold price near the $3,360-3,365 static resistance. A sustained strength beyond the latter should allow the XAU/USD pair to reclaim the $3,400 mark and climb further towards the next relevant hurdle near the $3,434-3,435 area, or the weekly swing high.

US-China Trade War FAQs

Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.

An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.

The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.

Source: Fxstreet